Despite logistics and labor challenges, Canadian lumbermen cite positive trends in their markets.
“Prices have increased over the last couple months and the demand for SPF continues to be very strong because of good U.S. housing starts and permits,” reported a Quebec lumber manufacturer. “The housing industry is very bullish, which fuels demand. We always like to look at the housing results in the U.S. and they are higher now than they were last year at the same time. Then you look at the new houses available on the market and the inventories are lower than they were at this time last year also.”
In terms of grades, a Quebec lumber wholesaler said, “There is a big demand for the MSR. Everything that goes in to the manufacturing, such as the trusses, the wall panels, the treated wood, these plants are extremely busy and they are just trying to catch up on the current demand. Premium is very difficult to find and 2×4-8 foot is a tough item to find. I would say all the commodities – what goes directly into the new construction – like the No. 2 and Better are popular. MSR carries a pretty interesting premium over the No. 2, actually a bigger premium than we are used to seeing in the past years.”
According to an Ontario lumber source, “We have not been without our challenges. Over the last month or two we had production issues in the east with some COVID cases and the very cold weather in January also was a big problem for production. The production results for the month were less than expected overall because of the weather.”
A Quebec wholesaler reported, “Another big issue that we have is the logistics problems – the cold weather in Canada slows down the number of rail cars that were allocated and at the same time there is a trucking issue in the market. It is very difficult to get the trucks. The cost of transportation is going up.”
“We have a lot of challenges,” an Ontario lumberman noted, “but at the same time the demand is very strong. We saw a little bit of slowdown in demand mid-to-late January, also due to weather in the U.S., with snowstorms and colder weather and we saw the same thing for the Ontario market. But that is behind us now and the demand is coming back stronger than it was. The order files in the east are about four weeks. Pretty much all the sawmills have that, so right now we are offering lumber to ship in the month of March and it looks a lot like last year. In ’20-21, we had a similar couple of weeks in January where the demand slowed down, just to pick up and get even stronger. We have seen a pickup in demand since the beginning of February. I am optimistic for the next few months ahead.”
“The big question we all keep getting,” according to a Quebec lumber manufacturer, “is ‘will the prices get to where they were last year?’ We have similar trends but I am not ready to say that it will. But for the next two months, I am very optimistic for prices. The only thing I would factor in right now is that there have been some very big logistics issues out of western Canada since what they went through with the mudslides and the rain. They haven’t been able to catch up to their regular shipments. In the next months we might see a little bit more wood out of the west, so that could slow us down a little bit on the supply side. I am not sure we are going to see similar pricing numbers as last year, but we could get close.”
Echoed an Ontario lumber supplier, “Last year it got a little bit out of control. We saw some buyers not thinking twice about buying, just purchasing whatever they could find. I think this year the buyers are more disciplined, but at the same time they still need to have wood in their yards to support their customer base. We are going to see some $1,500 Great Lakes prices, but I don’t know if we are going to see $1,700. But who knows? Human nature can do some funny things in the short term, so anything is possible!”
On the Pine side, “The demand is good and the market is pretty diversified actually; everything is selling fairly well,” noted an Ontario lumber manufacturer. “Producers were able to get a price increase recently. There is not much out there that is performing poorly currently, but that could all change as the Spruce prices change. The U.S. has decreased the tariffs on Canadian products, which will see a little more material going down there and that might lean out the inventories a little bit. We are not going to see the prices we saw on Spruce last winter, but I think we might be two-thirds to three-quarters of the way there, which will still be quite good for most.”
“Pine logs are stable now,” according to an Ontario contact. “It was an issue last year with everything benchmarked to the U.S. market, but that seems to have stabilized. It has been pretty much the norm in terms of the logging season; we are ok that way, but the log supply is a little tighter this year than in other years.”
A Quebec lumber producer reported, “I do not see prices falling off and I think it is going to stay pretty good. Our Canadian market is quite small compared to the states and it really depends what happens south of the border. If the demand stays good down in the U.S., then they will be less likely to move wood into our market – that is the key. We don’t see the Americans sending material up north, because once that starts, it just throws a wrench into everything. So far so good. Trucking is an issue; of course everybody is feeling the pinch on that. There have been a few hiccups with the freight here and there. It just seems to be that there are not as many trucks available as there once were.”
Remarked an Ontario lumber producer, “It is about time the sawmills finally got some value for the product. We went 10 years after 2008 where everything was in the tank. Some mills went under and a lot of them just held it together and you were not able to put any capital into your operation to replace equipment. People were patching everything up, but eventually things have to be replaced. You almost need five years of this good business just to get yourself back in line again and we certainly welcome this.”
